What is a limitation of the resource-based view in understanding firm success globally?

What is a limitation of the resource-based view in understanding firm success globally?

• A. It primarily focuses on external market competition
• B. It overlooks internal resources crucial for success
• C. It suggests firms' outcomes are influenced by their environments
• D. It emphasizes shareholder value above all

Answer: (C)

The correct understanding of the limitation of the resource-based view (RBV) in the context of global firm success relates to how this perspective typically centers on a firm’s internal resources as the main drivers of competitive advantage. The resource-based view emphasizes unique resources and capabilities that a firm possesses, suggesting that these internal factors are critical to achieving superior performance and success. However, the option that discusses the influence of environments on firms' outcomes underscores a limitation because the RBV may not adequately account for the external factors that significantly impact a firm's ability to succeed in global markets. While internal resources are vital, external elements such as market conditions, regulatory environments, and cultural differences can greatly influence performance. Thus, a comprehensive understanding of global business success should integrate both internal capabilities and external environmental factors, which the RBV does not fully address. This indicates that relying solely on the RBV could lead to an incomplete analysis of a firm's potential for success in various global contexts. Recognizing this gap is essential for firms operating in dynamic and diverse international settings, as it encourages a more holistic view that includes both internal and external influences on firm performance.

The correct understanding of the limitation of the resource-based view (RBV) in the context of global firm success relates to how this perspective typically centers on a firm’s internal resources as the main drivers of competitive advantage. The resource-based view emphasizes unique resources and capabilities that a firm possesses, suggesting that these internal factors are critical to achieving superior performance and success.

However, the option that discusses the influence of environments on firms' outcomes underscores a limitation because the RBV may not adequately account for the external factors that significantly impact a firm's ability to succeed in global markets. While internal resources are vital, external elements such as market conditions, regulatory environments, and cultural differences can greatly influence performance. Thus, a comprehensive understanding of global business success should integrate both internal capabilities and external environmental factors, which the RBV does not fully address. This indicates that relying solely on the RBV could lead to an incomplete analysis of a firm's potential for success in various global contexts.

Recognizing this gap is essential for firms operating in dynamic and diverse international settings, as it encourages a more holistic view that includes both internal and external influences on firm performance.